century 21 accounting © 2009 south-western, cengage learning lesson 13-2 financial statements and...
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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 13-2LESSON 13-2
Financial Statements and Analysis
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
INCOME STATEMENT INCOME STATEMENT FOR A CORPORATIONFOR A CORPORATION page 377
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
INCOME STATEMENT INCOME STATEMENT FOR A CORPORATIONFOR A CORPORATION page 377
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
ACCEPTABLE AND ACTUAL ACCEPTABLE AND ACTUAL COMPONENT PERCENTAGESCOMPONENT PERCENTAGES page 378
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
SHARE OF NET INCOME SHARE OF NET INCOME ASSIGNED TO PREFERRED STOCKASSIGNED TO PREFERRED STOCK page 378
Calculating Share of Net Income for Preferred Stock
Total Par Value Dividend Rate =Preferred Stock’s
Share of Net Income
$170,000.00 8% = $13,600.00
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Total Net IncomePreferred Stock’s
Share of Net Income
=Common Stock’s
Share of Net Income
SHARE OF NET INCOME SHARE OF NET INCOME ASSIGNED TO COMMON STOCKASSIGNED TO COMMON STOCK page 378
Calculating Share of Net Income for Preferred Stock
$96,742.51 $13,600.00 = $83,142.51
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
EARNINGS PER SHAREEARNINGS PER SHARE page 379
Calculating Earnings per Share
Share of Net Income
Shares of Stock Outstanding
= Earnings per Share÷
$83,142.51 31,950 = $2.60÷
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
STATEMENT OF STOCKHOLDERS’ STATEMENT OF STOCKHOLDERS’ EQUITY FOR A CORPORATIONEQUITY FOR A CORPORATION page 379
2.2. Retained earnings section2.2. Retained earnings section
1.1. Paid-in capital section1.1. Paid-in capital section
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Total Stockholders’
Equity
Shares of Capital Stock Outstanding
= Equity per Share
÷
ANALYZING A STATEMENT OF ANALYZING A STATEMENT OF STOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITY page 380
Calculating Equity per Share
$170,000.00 1,700 = $100.00÷Preferred
448,655.86 31,950 = 14.04÷Common
$618,655.86Total
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Calculating Price-Earnings Ratio
Market Priceper Share
Earnings per Share
=Price-Earnings
Ratio÷
$19.50 $2.60 = 7.5 times÷
ANALYZING A STATEMENT OF ANALYZING A STATEMENT OF STOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITY page 380
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
BALANCE SHEET FOR A BALANCE SHEET FOR A CORPORATIONCORPORATION page 381
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
BALANCE SHEET FOR A BALANCE SHEET FOR A CORPORATIONCORPORATION page 381
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Beginning Book Value
=Allowance for Uncollectible Accounts Beginning Balance
–Accounts Receivable Beginning Balance
ACCOUNTS RECEIVABLE ACCOUNTS RECEIVABLE TURNOVER RATIOTURNOVER RATIO
Calculating the average book value of accounts receivable
page 382
$124,579.31=2÷$128,536.91)+($120,621.71
$128,536.91=$6,697.63–$135,234.54
Ending Book Value=Allowance for Uncollectible
Accounts Ending Balance–
Accounts Receivable Ending Balance
$120,621.71=$4,362.18–$124,983.89
Average Book Value of Accounts Receivable
=2÷Ending Book Value
of Accounts Receivable
+Beginning Book
Value of Accounts Receivable
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
ACCOUNTS RECEIVABLE ACCOUNTS RECEIVABLE TURNOVER RATIOTURNOVER RATIO
Calculating the accounts receivable turnover ratio
page 382
Net Sales on Account
Average Book Value of Accounts
Receivable=
Accounts Receivable
Turnover Ratio÷
$861,356.72 $124,579.31 = 6.9 times÷
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
ACCOUNTS RECEIVABLE ACCOUNTS RECEIVABLE TURNOVER RATIOTURNOVER RATIO
Calculating the average number of days for payment
page 382
Days in YearAccounts
Receivable Turnover Ratio
=Average Number of Days for Payment÷
365 6.9 = 53÷
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Average Stockholders’ Equity
=2÷December 31
Stockholders’ Equity+
January 1 Stockholders’ Equity
$498,622.11=2÷$618,655.86)+($378,588.35
19.4%=$498,622.11÷$96,742.51
Rate Earnedon Average
Stockholders’ Equity=
AverageStockholders’
Equity÷
Net Incomeafter FederalIncome Tax
RATE EARNED ON AVERAGE RATE EARNED ON AVERAGE STOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITY
Calculate average stockholders’ equity
page 383
Calculate the rate earned
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
AverageTotal Assets
=2÷December 31Total Assets
+January 1
Total Assets
$838,573.69=2÷$952,171.03)+($724,976.34
11.5%=$838,573.69÷$96,742.51
Rate Earned onAverage Total Assets
=Average
Total Assets÷
Net Incomeafter FederalIncome Tax
RATE EARNED ON RATE EARNED ON AVERAGE TOTAL ASSETSAVERAGE TOTAL ASSETS
Calculate average total assets
page 383
Calculate the rate earned
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LESSON 13-2CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
TERMS REVIEWTERMS REVIEW
earnings per share equity per share market value price-earnings ratio rate earned on average stockholders’ equity rate earned on average total assets
page 365